French president Nicolas Sarkozy has ordered a “general mobilization” to slash France’s budget deficit in a frantic effort to safeguard the country’s AAA rating and head off a downgrade by Standard & Poor’s.

Mr Sarkozy returned from the Riviera to chair an emergency meeting in Paris with his inner cabinet and the central bank chief, Christian Noyer, breaking the sacrosanct August holiday.
The key ministries were given one week to draw up radical austerity measures.
“Whatever the impact of global uncertainty, or the S&P’s downgrade of America’s debt, or the turbulence of the markets, we will take the necessary steps, ” said finance minister François Baroin.
The political drama came as swirling rumours set off a collapse of French bank shares.

Société Générale fell 21pc before recovering partially, plagued by fears that it may be heavily exposed to tumbling global stockmarkets through its role in the equity derivatives market. Credit Agricole closed down 13pc, and BNP Paribas fell 10pc.